Health-Law Repeal Hardly a Panacea for CEOs' Concerns

For Immediate Release:

January 18, 2011

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David Wessel
Wall Street Journal

Newly emboldened Republicans want to repeal the Obama health law, a symbol of all that they—and many voters—dislike about President Barack Obama and congressional Democrats' approach to governing. If you were a business executive and employer, would you really favor repeal?

As Congress prepares to vote on a repeal of President Obama's landmark health care bill, WSJ's David Wessel has four reasons why business should be hoping the vote fails.

The U.S. Chamber of Commerce does. Its president, Thomas Donohue, calls for "a fresh look at health-care reform" that replaces Mr. Obama's "unworkable approaches with more effective measures." So does the National Federation of Independent Business, a small-business lobby. It says the law "costs too much and further jeopardizes the economic recovery." The big-company Business Roundtable is quieter: Many of its members doubt the Obama law does enough to restrain costs, but regard repeal as neither practical nor wise. Wal-Mart, for one, echoes this, saying, in effect: We don't want to go back to where we were.

At the National Business Group on Health, a collection of nearly 300 big employers, President Helen Darling, a former corporate-benefit administrator and Republican Senate staffer, says about executives who call for repeal: "If they really understood it, they wouldn't."

"I don't think we'll get a better solution in the U.S. in our lifetime" she said. "If it gets repealed, or gutted, we'll have to start over and we'll be worse off."

Set aside the rhetoric. The health overhaul doesn't do as much as friends or foes assert. It has so many parts that few nonexperts grasp what it actually is, a formidable PR problem for the White House. A useful Kaiser Family Foundation summary of the law runs 13 pages in small print. There's a lot for business not to like: taxes and fees on providers that will be passed along to the ultimate payers, restrictions on what employers can and can't do; a mind-numbing number of regulations to be written.

.But, for moment, look at the big picture from the perspective of a CEO.

One, the law moves to cover basically all the uninsured, except illegal immigrants. For businesses, that's a big plus. Those who offer insurance are paying at least some of the cost of caring for those who don't have insurance. Once implemented, the health law ends the freeloading. That should save business money—though executives, rightly, worry that if the government's expanded Medicaid (for the poor) and Medicare (for the elderly) programs pay less, private payers will be forced to pay more.

Assuring Americans that they'll be able to buy health insurance— with subsidies if they're low-income—has less direct effects, too. It'll make people more willing to change jobs, even if there are illnesses in their families. That's a plus for some companies (particularly small ones that find health-insurance issues a barrier to recruiting) and a minus for others (who may lose valued workers because health insurance won't be a tether). The change also helps cope with one of the biggest drivers of health-care cost: chronic disease, which is nearly impossible to manage when people are in and out of health insurance.

Two, for really small businesses, despite understandable objections to some of the law's complexities, there are often-overlooked features. The most tangible are the taxpayer-financed health-insurance subsidies for some of them. Over time, if the law is implemented as written, small employers will be able to get out of the business of buying and shopping for health care by turning that over to the new "exchanges," the marketplaces for health insurance that are to be organized in each state.

For all employers, the exchanges offer another hidden benefit: an eventual end to what's known as Cobra, the requirement that employers offer temporary coverage to former employees, which can be costly because sicker employees are more likely to take the offer than others.

Three, even really big businesses are now frustrated that they lack the muscle to force changes to the health-care system that are needed to slow the unsustainable pace of cost increases. "Harvard is a big business," says Harvard University health economist David Cutler, a fan of the law. "We insure 10,000 people. We're not big enough to do anything in our market. And that's not unusual."

The government insures 93 million people, 37% of all those with insurance. And that's before the overhaul. If the government uses the levers in the health-care law to truly change the way it buys health care, to successfully structure incentives to get more high-quality care instead of simply more care, then the American health-care system will change in ways that will pay dividends to everyone, including employers and workers who pay for insurance.

If the government fails, then costs will rise inexorably. Nothing in the law guarantees success: The law embodies almost every idea anyone has offered and hopes a couple of them will work. No wonder executives are skeptical. But here's the question: Would repeal in the current political climate be followed by more muscular restraints on health-care costs? Or weaker ones?

Talking about repeal of the health law may be a winning political strategy for Republicans, a rare way to please both workers and business executives. As long as they don't actually succeed in doing it.